Copperbelt Vitality Company (CEC), an organization that provides energy to mining operations in Zambia and DR Congo, is ready for a $145m funding in a deal led by the corporate’s largest shareholder, non-public fairness agency Affirma Capital.
Norfund, the Norwegian growth finance establishment, together with Kommunal Landspensjonskasse, a Norwegian pension fund, are becoming a member of Affirma to finance the transaction for a 36.34% stake in CEC, which is listed on the Lusaka Inventory Alternate. Affirma was initially the non-public fairness arm of Customary Chartered Financial institution, earlier than being spun out as an impartial agency in 2019.
Whereas non-public fairness corporations sometimes look to promote, or ‘exit’, their stake in a enterprise after round 5 years, on this case Affirma has chosen to stay invested in CEC through a ‘continuation deal’. This basically entails Affirma appearing as each the vendor and the client within the transaction, with the agency’s unique traders getting their capital again and new traders coming onboard. In accordance with Affirma, the deal is the most important ever continuation deal for a single asset in Africa.
The traders who funded Affirma’s unique funding in CEC in 2014 will stroll away with round 3 times the capital they put into the enterprise, through a mix of the sale and dividends paid over the past decade.
In an interview with African Enterprise Journal, Ronald Tamale, Affirma’s founding accomplice and head of sub-Saharan Africa, mentioned that CEC’s surging worth over the previous decade displays the corporate’s means to revenue from the expansion of the mining sector in each Zambia and DR Congo.
“We’re mission vital to the mines in offering that energy,” he says, including that the administration staff has helped steer it by a number of challenges in recent times.
Powering development
CEC can hint its historical past to the colonial period, however assumed its fashionable type in 1997 when it was privatised by the Zambian authorities. The core enterprise of the corporate entails buying electrical energy from the state-owned Zambia Electrical energy Provide Company (ZESCO) and distributing it to mines on the Copperbelt. Extra just lately, nonetheless, CEC has sought to broaden by “backward integration” into electrical energy era. A 34 MW photo voltaic plant was commissioned final February, with one other 60 MW facility on account of comply with swimsuit this month.
Tamale says that progress in direction of restoring political and financial stability in Zambia for the reason that election of President Hakainde Hichilema in 2021 has been a “main issue” in Affirma’s choice to re-invest in CEC. Zambia has grow to be enticing for traders by providing the “the correct management, the correct insurance policies and the correct mindset,” he says.
“I’d most likely say Zambia is within the prime two or three locations proper now for Africa, the place folks would wish to go make investments,” Tamale says. Hichielma has pursued extra business-friendly insurance policies than former president Edgar Lungu and sought higher relations with lenders.
Now that Affirma has determined to reinvest, Tamale says that CEC will think about increasing the ability distribution community in Zambia. Output from mines is ready to develop considerably with copper in excessive demand on account of its function within the power transition, which means that mines are “going to wish energy”. Hichilema has set a extremely bold goal of increasing manufacturing to 3m tonnes a yr by 2030, greater than treble its present degree.
Tamale provides that “increasing extra into renewable power” may even be a core focus for CEC. The corporate is taking a look at investing in wind energy along with the photo voltaic vegetation it has already commissioned. This helps place CEC to promote energy to the Zambian electrical energy grid and the regional Southern African Energy Pool.
One other key precedence shall be supplying extra energy to prospects in DR Congo. CEC owns the interconnector that enables electrical energy to be exported from Zambia into DR Congo and Tamale says the corporate is wanting into increasing its capability. He provides that energy generated from renewable sources and equipped by CEC’s distribution infrastructure is a horny prospect for mines in DR Congo, that are in any other case pressured to depend on costly diesel turbines.
